12/4/2014

StampDuty:ABriefOverviewInTheStateOfMaharashtraGovernment,PublicSectorIndia

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India:StampDuty:ABriefOverviewInTheStateOfMaharashtra
LastUpdated:20October2010
ArticlebyRenuParekh
ALMT

Aninfrastructureprojectinvolves,besidestheactualprojectdocuments,financedocuments,securitydocumentsetc.Dealing
withlandplaysacriticalroleinmostprojects.Theroleofalegalcounselincludespreparing,executing,vettingofthese
documentsandstructuringawholesometransaction.Asthecostsoftheseprojectsareenormoussoaretheresultant
implicationsonstampduty.Since,theISA,BSA(bothdefinedlater)andotherstampactshavediverseclassificationsof
instrumentsunderwhicheachofthemarecovered,itisnecessaryforlegalcounseltounderstandthebackgroundandnature
ofthestampdutyanditseffects/impactontheentireproject.
Stampdutyisakindoftax,justlikesales/incometaxetc.andjustifiablyitsbasicpurposeistoraiserevenueforthe
Government.Thus,likeanyothertax,stampdutymustbepaidinfullandontimetotheGovernment,withdelaysattracting
penalties.Broadlyspeaking,stampdutyisleviedonaninstrument(andnotonatransaction)stampdutyispayableon
property(whetherimmovable/movableortangible/intangible)eitheronafixedbasisoronthebasisoftheconsideration
mentionedintheinstrumentasthecasemaybe.Incaseofimmovableproperty,thereisanadditionalconceptofvaluationof
theproperty,whichisalsotakenintoaccountwhiledeterminingthestampdutypayable.
InIndia,theIndianStampAct,1899(ISA)istheCentralLegislationwhiletheStateshavetheirownlocalstampactstodeal
withissuesarisingwithinthatparticularState.TheBombayStampAct,1958whichcameintoforceon16thFebruary1969
(BSA)isthelawforstampdutywithintheStateofMaharashtra.ConstitutionofIndiaempowersboththeParliamentandthe
StateLegislaturetomakeprovisionsandlawsforstampdutywithinitsambit.Accordingly,ISAcoverscertaindocumentsas
specifiedtherein.AninstrumentisdefinedunderBSAtoincludeeverydocumentbywhichanyrightorliabilityis,orpurportsto
becreated,transferred,limited,extended,extinguishedorrecorded,butdoesnotincludeabillofexchange,cheque,
promissorynote,etc.Thesedocumentsthathavebeenexcluded,asaforesaidaregovernedundertheISA.Theword
'document'isneitherdefinedeitherinISAnortheBSAandoneneedstorelyupontheEvidenceAct,1872andTheGeneral
ClausesAct,1897foritsinterpretation.WiththeenactmentofInformationTechnologyAct,2000theterm'document'also
includesanyelectronicrecordasdefinedtherein.Popularly,thewordsinstrumentsanddocumentsareusedinterchangeably.
Oftenthephrase'dulystamped'isusedinrelationtoaninstrument.Itconnotesthataninstrumentbearsan
adhesive/impressedstampofnotlessthantheproperamount.StamppaperscanbevalidlypurchasedfromtheState
'authorizedvendors'andincasesofhighdenomination,stampdutycanalsobepaidbywayoffrankingtheinstrumentagain
throughtheStateauthorizedchannels.Adulystampeddocumentcanbeadmittedasevidenceinanylawfultransactionorina
courtoflawwithfewexceptionsunderthecriminalproceedings.
InMaharashtra,priorto1stMay,1994stamppaperscouldbepurchasedinthenamesofadvocatesorinanyothername.
However,thereafterstamppapersaretobepurchasedinthenameofoneofthepartiestotheinstrument.Furthermore,the
validityofstamppapersarerestrictedtoaperiodof6monthsandifthestamppaperisusedthereafterthenitisdeemedthat
thedocumentisexecutedonordinarypaperwithoutastamp.
IfaninstrumentfallswithinseveraldescriptionsinScheduleIoftheBSAwithdifferentratesofduties,thentheinstrumentis
chargeablewiththehighestofthedutyprescribed.Inaddition,BSAalsoprescribesmethodologyforadjudication(proper
valuation),refundofduties,grievanceprocessesandconvictionsetc.TheCollectorisnormallyauthorizedorvestedwiththe
powerofadjudication.Ifadocumentisnotstampedoradequatelystamped,itislikelytobeimpounded.
Circumventingtheinstrumentsclassificationswithaviewtoavoidorreducedutieshaslongbeenhistoricallyestablished.In
ordertobringthiscircumvention/avoidancewithinthetaxingnetwork,theclassificationsofinstruments,ratesetc.arerevised
periodically.TheGovernmentistopromotecertainindustries,remiteitherinfullorinpartthestampdutypayablebysuch
identifiedindustries.
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12/4/2014

StampDuty:ABriefOverviewInTheStateOfMaharashtraGovernment,PublicSectorIndia

TheDepartmentofRegistrationandStamps,GovernmentofMaharashtra,the2ndhighestrevenueearningdepartment,hada
vastpresencewithover400officesmanagedby2500employeesandgeneratesvariousjobopportunities.Itundertookan
ambitiousITprojectcalledSARITA(StampsandRegistrationInformationTechnologyBasedAdministration)wherebyallthe
subregistrar/districtlevel/divisionlevelofficesaswellastheHeadQuartersatPunehavebeencomputerizedandautomated.
SARITAhasbeenoperationalsinceJanuary2001andhasregisteredmorethan2milliondocumentswiththeestimated
revenuesexceedingRs.5000crores.
Thechallengeforlegalcounselinstructuringdocumentsarisestomakeit'stampdutyfriendly'withthedifferentslabsand
classificationsavailable.CareneedstobetakenasthedocumentsattractdutyonarrivalwithinaStateandwitheager
regulatorsaround,it'sbesttobeconformistinapproach.
Thecontentofthisarticleisintendedtoprovideageneralguidetothesubjectmatter.Specialistadviceshouldbesoughtabout
yourspecificcircumstances.
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